Three identical baskets of groceries from Coles, Woolworths, and supermarkets in the United Kingdom are not the same price in Australia.

Australian shoppers pay up to $2000 extra a year for exactly the same items.

When Nick Stace, CEO of Choice, saw the results of Today Tonight's latest expose on the prices of everyday supermarket items he concluded we are being conned.

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"It's incredibly expensive, your evidence shows that is exactly the case," he said.

"Vegemite for example, $2.99 in Australia, Coles and Woolworths.

"At Sainsbury's it is $2.54 and ASDA it is $2.86."

Nick said the supermarkets here, particularly Woolworths and Coles, have tried to deceive people really over the last few years by saying that consumers in Australia are getting good value for money.

To compare prices, we bought 31 food and grocery items, brand-names only, from Coles and Woolworths.

We chose the equivalent item from the UK's big 4 supermarkets.

Milo: in the UK it is $1.77, in Australia $3.26 at Coles and Woolworths.

Vegemite: the Brits enjoy it at $2.54 but even though it is made in Australia, we pay $2.99.

Sliced white bread: UK shoppers pay $1.63, we pay $3.89.

Litre of milk: $1.49 in the UK, at Coles $2.24, Woolies $2.09.

Dozen free-range eggs: $5.56 compared to $6.38 at Coles, $6.32 at Woolies.

Baked beans: In the UK cost $1.30 but $1.59 at Coles and Woolworths.

Butter: $2.50 in the UK against $4.22 at both Coles and Woolworths.

Sardines: jacked up by 152 per cent.

Dove soap: $2.10 in the UK, $4.49 here.

Craig Kelly from Southern Sydney Retailer's Association said our grocery prices should be going down, not up.

"They can put one item up the front that appears to be a very good price but as soon as you move away from that item you're being ripped off on everything else you touch," he said.

"For some reason the ACCC refuses to acknowledge the facts and wants to keep its head buried in the sand."

We asked the Australian Competition and Consumer Commission's Graeme Samuel why we are paying so much, particularly as he publicly declared "some commentators should take a Bex and a good lie down when it comes to the activities of major supermarkets".

Graeme Samuel emphatically refused our interview saying it was not the ACCC's job to monitor grocery prices.

Overall we found more than 90 per cent of the items we bought at Coles and Woolworths are more expensive than in the UK.

The total cost, our UK trolley is $105.25, compared with Woolworths at $131.85 and Coles at $135.20.

ACCC and company statements

ACCC

"We don't have a role in monitoring grocery prices here or overseas, nor expertise in international comparisons. Perhaps the best people to speak to would be the chains: Woolworths, Coles, Aldi - who make the pricing decisions."

Coles

"Food prices can be volatile, and recent OECD data showed that UK food prices increased by 7.2 percent in the past year, compared to a 4.7 percent rise in Australia.

As has been noted by the ACCC, supermarkets are not the drivers of food price rises in Australia. Fresh food prices in Australia are largely driven by production issues such as drought and production costs including fertiliser prices and transport costs which are much higher here than in the UK.

The other major driver of fresh food prices is global prices because a much higher proportion of food produce is exported from Australia than in the UK. As a result, prices tend to rise when global demand is high and fall when global demand falls, as in the current recession (see current milk prices).

Production costs of groceries are also affected by the small scale of the Australian market compared to a much bigger market in the UK. Economies of scale therefore mean the UK grocery prices can be lower in the UK than in Australia.

However, product manufacturers such as Kelloggs, Nestle, Unilever and Coca Cola should be asked directly why they charge more for the same products in Australia than in the UK.

In the case of Coles, our profit margin is about only three percent. This shows that Coles is not making huge profits and depends on offering customers the best value we can to earn a little bit on each product sold."

Woolworths

"The price of products on the supermarket shelves reflects the costs paid to suppliers. Woolworths’ costs directly account for less than a quarter of a product’s on shelf cost. Our average profit is about 3 cents in the dollar.

According to our figures Vegemite is only two percent cheaper in the UK than Australia. The price of products on the supermarket shelves reflects the costs we pay to suppliers. Suppliers are free to charge retailers in different countries different prices for similar products. A supplier may have many reasons for doing this e.g. differing input costs such as labour, transport, packaging etc.

Our internal inflation figures (based on what people actually buy) showed a drop in the last quarter - between April and June. Shelf price increases and decreases largely reflect the changing cost of the products we buy from our suppliers.

The price rises and falls Woolworths customers experience in store are similar to all retailers across the developed world and in that regard Australia is no different from other countries.

John West

Quotes attributed to Terry O'Brien, managing director of Simplot Australia, the owner of John West Foods which sells to the Australian and Asian markets.

"I have to make the point that John West in Australia is a completely different company to John West in the United Kingdom. Our products are different. We have nothing to do with each other.

We are unable to buy sardines caught in Australia so we buy them from Scotland. That means freight charges can potentially be much greater than those paid by John West in the United Kingdom.

Our company also buys many products on an annual basis and therefore prices can be affected by the exchange rate depending on what the exchange rate was at the time of the initial supply order.

There are also other factors. For instance, you can purchase different quality fish and pay accordingly. I really don't know what standard of fish the UK arm of John West purchases but I know we purchase high quality fish.

Another variable is oil. Sometimes the kind of oil used can have a big impact on the price. Using olive oil can force a big increase in price comparied to vegetable oil which is relatively cheap."

Milo

"Consumer products simply don't cost the same all over the world. There are huge differences driven by population size, competition and transport costs to name a few. Australia is often more expensive because of these factors.

I note you've compared the 200g to the 400g size, which doesn't help, since smaller sizes are always more expensive, for obvious reasons.

If you compare like for like (400g in the UK to 440g in Australia), you will find that the difference per 100g is about 35 per cent.

We can't tell you why retail prices differ because we have nothing to do with setting them; we don't know if that price you sourced at Tesco's, for example, was a loss leader or a promotion.

What we do know is that formulations for the same branded products vary from country to country to take account of local taste preferences. These formulation differences apply across a host of products.

We make our Milo at our Smithtown factory on the mid-north coast of NSW with milk solids. The UK formulation, which is not made in Australia, does not use milk solids and the ingredients happen to less expensive."

Cadbury
"At Cadbury, we are always keen to ensure Australians receive great value for money when buying our products. It is important to note that as a manufacturer, by law, Cadbury does not set the retail price people pay in stores. This is done by the retailer where consumers purchase the products.
Some things that can impact manufacturer costs in Australia include:

1. Due to the sheer size of Australia, transportation costs are higher here than in smaller countries. Our products can be found in almost every supermarket, convenience outlet and corner store across the country.

2. Greater production volumes mean that manufacturer costs are decreased which allows these cost reductions to be passed on to consumers. Australia has one third of the population of the UK so our production volumes are one third less than in the UK. Producing smaller volumes is not as cost effective as producing larger volumes."

Heinz

"A multitude of factors contribute to the pricing of our products both here and in the UK.

Pricing is heavily influenced by many factors, including the size of the local market, cost of ingredients, packaging and freight costs."

Dove

"It is very difficult to compare the price of a product across different countries accurately, or in any meaningful way. There are a number of variables that contribute significantly to the end cost to the consumer - transportation and distribution methods, the costs and duties associated with importing products and exchange rate fluctuations are just some of the factors that can affect the price of a product in any given market."

Kraft

The spokesman said the UK division of Kraft is separate to the Australian arm but the Australian arm does supply Vegemite to the United Kingdom.

He said that there were three main contributing factors to why Vegemite product price variation may occur.

1. Shorter shelf life in the UK due to shipping
2. Commodity fluctuations

3. It may be Vegemite being sold at discount "loss leader" in the United Kingdom to encourage some of the 400,000 Aussies and Kiwis living in the UK into shops.

The theory is that when people go into a shop for a specific product, more often than not they will buy other things. About 9-10c a serve, he said Vegemite is still great value whichever country you are in.

In relation to the salad dressings, he said the dressings in each country for each country's tastes.

He also raised the possibility of "economies of scale" as the UK is a bigger consumer market with associated larger production volumes, which can lead to cost efficiencies.

Related link

For more information about consumer issues, visit the Choice at www.choice.com.au.